OSAKA –
Japan’s prolonged period of rising prices is continuing to squeeze households and businesses, driven by the weak yen, higher raw material costs and rising wages, forcing consumers to change how they shop and cook while companies search for ways to contain costs without losing customers.
At a supermarket in Osaka this month, employees were carrying out what has become a regular monthly task: replacing price tags one by one as another round of increases took effect.
September brought the largest wave of price increases this year, with prices revised for 4,923 products. More than 20,000 products are expected to become more expensive over the full year, exceeding last year’s total.
Consumers say the increases are often small individually, perhaps 10 yen or 20 yen at a time, but are becoming increasingly noticeable at the checkout.
Many of the changes become clearer when viewed over a longer period. One mother, who lives with her husband and four children and has kept household accounts since 2014, said a bottle of soy sauce that cost 278 yen in January 2015 now costs 462 yen, an increase of nearly 200 yen.
Milk, which her family consumes in large quantities, cost 142 yen in 2014. The price rose to 168 yen in 2018, 199 yen in 2020, about 222 yen in 2024 and most recently 246 yen.
Her 12 years of household records show gradual increases across a broad range of products. Gasoline prices also rose about 15% around 2022, when Russia’s invasion of Ukraine caused major disruptions to global energy and commodity markets.
Another major driver has been the historically weak yen.
The Japanese currency reached a postwar high of 75.32 yen to the dollar in October 2011 before entering a gradual weakening trend. The depreciation accelerated following Russia’s invasion of Ukraine four years ago, with the yen at one point falling beyond 160 to the dollar.
The impact is particularly strong on imported food. A loaf of bread that once cost 78 yen was recently selling for 181 yen. Japan relies on imports for about 80% of the wheat used for food, making products such as bread and udon particularly vulnerable to higher procurement costs.
Consumers have responded by becoming more selective about spending, prioritizing necessities while avoiding purchases that are not essential.
The weak yen is also affecting entertainment.
Summer Sonic, the annual music festival held each August, is known for bringing major overseas performers to Japan. But organizers say the cost of hiring international artists has soared because fees are generally paid in dollars.
When the exchange rate was around 80 yen to the dollar, it was possible to bring leading global acts to Japan at far lower yen-denominated costs. With the exchange rate having doubled from those levels at times, organizers say attracting the same caliber of artists has become increasingly difficult.
The share of overseas performers at Summer Sonic has fallen from about 80% of the lineup to less than 50%.
Organizers say that maintaining a festival centered on international artists would ultimately require higher ticket prices, raising concerns that the cost would become too heavy for customers.
Businesses are taking different approaches to the same pressure.
An air freshener manufacturer in Nara Prefecture, which produces most of its goods domestically, has decided to raise prices by about 7% from next month.
Prices for plastics used in containers and caps have risen by about 20% to 40% following prolonged disruption in the global economy, leaving the company with little choice but to pass some of the increase on to consumers.
Other companies are determined to hold prices steady.
One confectionery maker has kept the price of its ramune candy at 30 yen since the product was launched in 1978, even as the plastic used for its containers has become about 30% more expensive.
Because inexpensive children’s sweets sell at such low prices, even a 10-yen increase can represent a large percentage rise. The company has instead altered production, making individual pieces larger to improve manufacturing efficiency while reducing the total quantity in each package.
The strategy allows it to control costs without changing the retail price.
The company said it wants to continue making products affordable because its main customers are children.
With households and businesses increasingly strained, the government this month approved a reduction in the consumption tax on food as part of its response to prolonged inflation.
Under the plan, the consumption tax rate on food and drink will be reduced from 8% to 1% for two years beginning next April.
The measure is expected to increase demand for takeout meals.
At a bento shop in Osaka, food eaten inside the store will continue to be taxed at 10%, while takeout purchases will qualify for the reduced 1% rate.
Consumers may expect the tax cut to translate directly into lower prices, but businesses say that may not be possible.
The bento shop is continuing to face higher costs for ingredients, labor, containers, chicken and cooking oil. The operator said additional price increases may exceed the benefit from the tax reduction, making it difficult to know how much prices can actually be lowered.
Farmers are also expressing concern.
Asai, who grows edamame in Yao, Osaka Prefecture, said the tax reduction does not sufficiently take producers into account.
About 80% of farmers, including Asai, are tax-exempt businesses with annual sales of 10 million yen or less and are therefore exempt from paying consumption tax.
Under the new system, the amount left in their hands from agricultural sales would effectively decline as the tax component falls from 8% to 1%.
Asai estimates that the change could reduce his income by around 1 million yen.
The government has decided to provide payments to farmers whose businesses are affected, but Asai remains concerned about the timing.
“What we really need is timely support,” he said, noting that payments could arrive a year later and farmers would have to find a way to survive until then.
Economists say Japan’s prolonged inflation has become more persistent because several pressures are occurring at the same time.
Higher raw material costs remain a fundamental cause, but continuing wage increases and the weak yen have added further pressure.
In Japan, prices have often risen before wages, limiting consumers’ ability to keep pace and contributing to weaker spending.
The inflationary period that began in 2022 has nevertheless begun to show signs of moderation.
The consumer price index, which measures changes in the prices of goods and services, has remained below the Bank of Japan’s 2% price stability target for eight consecutive months this year.
At the same time, real wages, which take inflation into account, have remained positive for seven months.
Economists warn, however, that government measures are currently suppressing some price increases. If prices begin to rise sharply again, those measures may lose effectiveness and real wages could return to negative territory.
The ability of small and midsize businesses to continue raising wages will therefore be a key issue.
For households, the challenge is finding ways to economize without making daily life unbearable.
In Shiga Prefecture, the Shimada family, consisting of a couple and three growing children, has adopted a strict approach to food spending.
The family generally shops only once a week, reasoning that every additional visit to a supermarket creates another opportunity to spend money.
For dinner, Shimada prepares meals using inexpensive ingredients and makes as much as possible at home.
On one shopping trip, chicken breast was selling for 47 yen per unit. Rather than buying prepared ground meat, she uses chicken to make hamburg steaks herself.
To increase the volume at low cost, she mixes in 105-yen enoki mushrooms and 42-yen tofu, with the inexpensive ingredients making up a large share of the dish.
Parsley used for garnish is grown at home, while cucumbers from the family’s garden are used in potato salad.
Dressings are also made from soy sauce, vinegar and other ingredients already in the kitchen.
Shimada said the key to sustaining such efforts is not to treat saving money as a burden.
Prices will continue to rise, she said, so households have little choice but to respond, but trying too hard can quickly become exhausting.
Instead, she said it is better to find ways to enjoy the process and continue at a manageable pace.
Japan’s prolonged inflation is forcing households and businesses to absorb pain while relying on increasingly creative ways to reduce costs. Preventing a deeper slowdown in consumption will require policies that move the economy toward a healthier cycle in which wages and prices rise in balance.
Source: YOMIURI